Australian and New Zealand Dollars Due for a Pullback



Tue, 24 Mar 2009 10:01:55 -0400



By Jamie Saettele, Senior Currency Strategist strategist@dailyfx.com




-EURUSD choppy trade ahead of 1.38-1.39 resistance
-GBPUSD short term pattern unclear
-AUDUSD and NZDUSD 10 consecutive up days
-USDJPY threatens bearish stop

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Euro / US Dollar

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The next big move is most likely down for the EURUSD but it is unclear whether or not the pair will test resistance from the 61.8% retracement at 1.3811 or the 200 day SMA at 1.3890 before rolling over.  The longer term trend is still viewed as down since the decline from 1.4723 is an impulse.  I will be shorting either close to 1.40 or at lower levels if the pair shows signs of an impulsive decline. 

British Pound / US Dollar

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The break through the top of the channel that contained wave B signals that wave C (flat) is most likely underway to above 1.50.  Near term, there may be 5 waves up from 1.3653.  This leaves open the possibility of a correction back to the 1.4150-1.4268 zone.

Australian Dollar / US Dollar

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Price action in the AUDUSD since the October 2008 low has carved out what could be a head and shoulders continuation pattern.  This is pure speculation at this point but the ‘look’ is there.  The pair is testing what would be the left shoulder level now and price has increased for 10 consecutive days.  The risk of a correction, if not an outright reversal, has increased.

New Zealand Dollar / US Dollar

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The NZDUSD is in a position similar to that of the AUDUSD.  There is a count in the NZDUSD that calls for a wave 2 high to form before .6090.  If this is to occur, then a high should form within the next few days. 

US Dollar / Japanese Yen

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The longer term USDJPY decline may have resumed.  The advance from 87.09 is in 3 waves and price has dropped below the wave A high at 94.67, confirming that the decline is in 3 waves (and can not become an impulse).  Favor the downside as long as price is below 99.

US Dollar / Canadian Dollar

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The drop below 1.2350 negates the previously held bullish bias.  The USDCAD did exceed its wave 3 terminus on March 9, so it is possible that that advance completed wave 5 within a 5 wave advance from the 2007 low. Price has also dropped beneath its 55 day SMA, which favors bears.

US Dollar / Swiss Franc

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Watch for USDCHF support from Fibonacci all the way down to 1.0925.  The decline from 1.1973 is wave C of a flat (an extremely violent flat at that) that should lead to formation of a secondary low (primary low was 1.0367) in the next few weeks.

Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close.  He is also the author of Sentiment in the Forex Market.

Please send comments about this report to jsaettele@dailyfx.com


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